6378 teleproduction sales tax exemption

California has a lot to offer when it comes to shopping local. Yes, tax exemptions. Especially for those contributing to the state’s biggest money-makers - the entertainment industry. Being a mecca for entertainment through film, music and video games, the Greater Los Angeles area leads the world in the creation of recorded music and video games and produces more television shows than anywhere else. Hollywood also reigns as far as movies go, as the area produces about half of all films shot in the United States. Often referred to as “dream factories”, entertainment production companies in LA County alone employ more than 120,000 people and generate approximately $47 billion into the local economy. Obviously benefiting the entire state, it behooves the Golden state to keep the factories churning out creative productions.

As an incentive to keep production levels high, California created the 6378 teleproduction sales tax exemption. Basically, the exemption drops the amount of tax collected on audio and video production equipment sales from the standard 9% sales tax to just 3.5%. The two main restrictions that apply to those wishing to take advantage of this 5% discount include:

  • The purchased equipment must be used within the state of California
  • The purchased equipment is solely for use within the tele-production or post-production processes.

Always consult your accountant before taking an exemption to be sure your organization or individually you qualify for the production equipment exemption.

Other stipulations, as stated within section 6378 of the California Sales and Use Tax Regulations, Article 3, regulation 1532, include these provisions for what businesses qualify for the tax break:

The term "teleproduction or other postproduction services" also includes, but is not limited to:

(A) Services performed to transform, manipulate, assemble, and duplicate visual moving images and synchronous sound previously captured on film, video, or digital formats (audio or visual) or as data during principal photography.

(B) Services to create digital images, models, miniatures or sounds that may be, but are not required to be combined with live action images. Teleproduction or other postproduction services does not include the recording of music except music recorded with synchronous visual images.

(C) Film processing; film to tape transfers; tape to tape transfers; DVD or digital audiovisual multimedia format authoring and encoding; color correction; digitizing; on-line and off-line editing; negative cutting; assembling; animation, creating 2d images, creating 3d images (CGI), visual effects; compositing; digital video image manipulation; dirt fixes; motion control visual effects capture; scanning and recording to or from film, video or data; transform; standards or format conversion; transcoding; duplication (except as provided); titles; subtitling; credits; closed captioning; creating graphics; audio scoring; automated dialogue replacement; foley; audio mixing; audio editing; audio laybacks; audio laydowns; audio special effects; management of visual or audio assets and related files stored as data; film, video or audio (dialogue, music and effects) restoration and preservation; archiving, format transfer utilizing compression standards; film cleaning; quality control processes performed in conjunction with any other postproduction process; and creation of data files related to a service defined above.

As a leading supplier of audio and video post-production equipment, we’d be happy to help you with ascertaining whether the equipment you need qualifies for the tax discount. We simply need the required paperwork completed and submitted to us.

What does the exemption mean to your business’ budget? A purchase of just $1000 saves $55. Considering the overall equipment expense of a professional audio or video production company, these deductions in taxes paid can add up exponentially and quickly. On just one $20,000 purchase, a post-production company can save $1100.

Since 1999, the tax code has enabled many businesses within California’s entertainment industry to enjoy tax savings that otherwise would not be there. By purchasing your audio and video production equipment through a trusted California-based supplier, you too can enjoy those tax benefits along with the peace of mind that comes from buying from the best in the business - Cal Media Solutions.

15th Feb 2014 Josh Hatfield

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